175. One of the key proposals of the White Paper
is the repeal of Section 6 of the Child Support Act 1991, which
compels parents with care to apply to the CSA if they claim Income
Support or income-based Jobseeker's Allowance.
This change is scheduled to happen from 2008. The proposal had
originally been made by Sir David Henshaw on the basis of reducing
the administrative burden on C-MEC,
and was generally welcomed in much of the evidence received.
176. However, some reservations were expressed; while
acknowledging the administrative benefits of removing compulsion,
Citizens Advice stated:
"We are concerned [
] that many parents
on low incomes will not be in a position to agree a sustainable
voluntary arrangement, because the separation is not amicable,
because the former partner is no longer around, because his actual
income is not transparent or agreed, and because promised payments
do not materialise. It is understandable that any new system
replacing the CSA will want to try to minimise its caseload in
order to guarantee its own effectiveness - but this will only
prove to be a viable approach if parents are genuinely able and
willing to make private arrangements. The availability of good
quality advice, including face-to-face advice as well as websites
and other information, will be critical if the government's strategy
is to stand any chance of success."
177. Parents with care on benefit currently make
up 70% of the intake of new applications to the CSA, although
in terms of the Agency's total live caseload they account for
less than 40% of cases.
On the basis of these figures it is possible to calculate in broad
terms that, once compulsion is removed, there will be a significant
group of parents with care on benefit, numbering up to 556,000,
for whom it is unclear what will happen in terms of their child
The Secretary of State commented in supplementary written evidence
"There are significant behavioural uncertainties
which make precise estimates of behaviour once section 6 is removed
particularly difficult. The impact will depend on a number of
factors such as how attractive it will be for future benefit claimants
to make a maintenance agreement and how much support and encouragement
they will receive to make an agreement (both of which depend on
the level of the maintenance disregard and how targeted the information
and guidance services provided are). It also depends on how many
of this client group can be supported to opt for a private agreement.
As Sir David recommends, we are doing detailed modelling work
to assess the most likely impact but at this point we do not have
a specific estimate.
In general though we do expect fewer parents with
care to use the Child Maintenance Enforcement Commission (C-MEC)
as a result of removing the requirement that all parents with
care claiming benefits are treated as applying for child maintenance.
Although less benefit parents with care are expected to use C-MEC,
we expect those who do use it to be more likely to be assessed
as having a positive maintenance amount and maintenance be paid.
We aim to ensure that those who choose not to use C-MEC are supported
to make private arrangements rather than letting such parents
drop out of the maintenance system altogether."
178. A reduction in C-MEC's caseload from the removal
of compulsion appears to be assumed by the Government and there
are (as yet) no obvious safeguards to protect vulnerable parents
with care who may end up without any maintenance arrangement.
The Secretary of State noted in oral evidence that if there is
one specific lesson the Government should have learned from the
last 15 years of CSA operations, it is that "if you rush
these reforms you get them wrong."
179. Therefore, in a case where outcomes and effects
are unclear, the Committee
is very concerned about the moral hazard which may be created
if section 6 is abolished, by allowing non-resident parents to
avoid their parenting responsibilities and by leaving parents
with care on benefits. We would urge the Government to research
whether similar simplification and operational savings could be
achieved, and the moral hazard avoided, through a minimum lower
limit where maintenance amounts below a very low level are not
pursued because the benefits are too small and the costs too great.
We also recommend piloting the removal of the requirement for
parents with care on benefit to use C-MEC in order to analyse
the effect it will have on them and on C-MEC's caseload and resources.
If the Government does remove compulsion nationally in 2008, appropriate
safeguards must be installed to protect vulnerable parents with
care on benefit. The Government should also be prepared for the
effect such a move will have in the short term on increasing the
burden on C-MEC's resources as parents with care look for advice
on their child support options.
180. The "benefits disregard" (also known
as the Child Maintenance Premium) is the amount of child maintenance
received by parents with care that they are entitled to keep without
a corresponding fall in their benefit entitlements (Income Support
or income-based Jobseeker's Allowance). It is currently set at
£10 per week for all parents with care on benefit (where
maintenance is being paid) whose cases began after the 2003 reforms.
Under the old scheme rules (pre-3 March 2003 cases), all of the
maintenance paid by non-resident parents goes to the state to
offset the benefit cost.
181. The White Paper states that the £10 disregard
will be extended to all cases by 2008. Furthermore, the level
of the disregard will be "significantly" increased from
CHILD POVERTY EFFECTS
182. In her report on child poverty commissioned
by the DWP, Lisa Harker recommended that "reforms to the
child support system should aim to achieve the maximum impact
on child poverty and, to this end, a significantly higher disregard
of maintenance income in benefit calculations should be introduced."
183. Sir David Henshaw also highlighted the positive
impact any increase in the maintenance disregard would have on
child poverty (because it increases money flowing directly to
the parent with care), estimating that a full disregard would
lift between 80,000 and 90,000 additional children out of poverty.
184. The Government estimates that extending the
£10 disregard to all cases will benefit 44,000 parents with
care and 55,000 children, while the "significant" increase
in 2010/11 will "mean that more maintenance paid flows directly
to parents with care and will lift many children out of poverty."
A recent Parliamentary Question also provided poverty reduction
estimates based on the disregard being set at varying levels:
"Mr Plaskitt: The number of children lifted
out of poverty and cost of increasing the levels of the child
maintenance disregard in income support, Jobseekers Allowance,
housing benefit and council tax benefit in 2009-10 are shown in
the following table: